Sunday, September 6, 2015

The U.S. District Court for the Northern District of California recently held that a web-based platform used to send text messages was not an automatic telephone dialing system ("ATDS") under the federal Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227, because it required "human intervention…in several stages of the process" for sending the text messages.

A copy of the opinion is available upon request.

The plaintiff customer, who was a patron of a Las Vegas gentlemen's club (the "Club") sued the Club and a third-party mobile marketing company (the "Marketing Company") for sending him an allegedly "unwanted" text message. The Club had hired the Marketing Company to provide a web-based platform for sending promotion texts to its customers, including the plaintiff customer.

Sending text messages through the web-based platform involved multiple steps. First, one of the Club's employees would input phone numbers into the platform either by manually typing them in or cutting and pasting from an existing list. Also, the Club's customers could add themselves to the platform by sending their own text message to the system.

Second, a Club employee would designate specific phone numbers to which a message would be sent. The employee would then "click 'send' on the website…to transmit the message" to the Club's customers, including the Client. The employee could either transmit the texts in real time or preschedule them to be sent at a later time.

As a result of this process, an allegedly unwanted text was sent to the plaintiff customer.

He sued the Marketing Company and the Club for a one count violation of the TCPA. Essentially, he argued that the Club and Marketing Company violated the TCPA because the text message was sent using an ATDS.

Early in the case, the plaintiff customer accepted an offer of judgment from the Marketing Company and that defendant was dismissed. Later, the Club moved for summary judgment.

As you may recall, under the TCPA, it is "unlawful for any person within the United States…(A) to make a call (other than a call made for emergency purposes or made with the prior express consent of the called party) using [an ATDS]…(iii) to any telephone number assigned to a…cellular telephone service…or any service for which the called party is charged for the call." 47 U.S.C. § 227(b)(1).

Furthermore, an ATDS is defined as "equipment which has the capacity---(A) to store or produce telephone numbers to be called using a random or sequential number generator; and (B) to dial such numbers." Id. at § 227(a)(1).

The Club argued that the statutory definition of an ATDS was "clear and unambiguous" and that because of this the interpretation "begins and ends with the statutory text" above, without regard for any Federal Communications Commission ("FCC") interpretation.

The Club also argued that, to be an ATDS, the "equipment must have the capacity to store or produce telephone numbers to be called using a random or sequential number generator."

However, the Court held that because Congress had expressly conferred authority on the FCC to "issue interpretive rules pertaining the TCPA," any rules or regulations interpreting or expanding the definition of ATDS were to be applied to this case.

Additionally, the Court noted that the Hobbs Act, 28 U.S.C. § 2342(1) and the Federal Communications Act, 47 U.S.C. § 402(a), "operate together to restrict district courts from invalidating certain actions by the FCC." In particular, the Hobbs Act "jurisdictionally divests district courts from ignoring FCC rules interpreting the TCPA."

Accordingly, the Court held that the language of the TCPA alone was not dispositive of whether the web-based platform the Club used was an ATDS.

Turning to the FCC's definition of ATDS, the Court noted a number of FCC regulations that expanded the definition of ATDS beyond the plain statutory language in the TCPA.

The Court noted that, based upon a 2003 FCC ruling, in addition to automatic dialers, "predictive dialers" (i.e. systems that dial numbers from customer calling lists), also fall "within the meaning and statutory definition of…" ATDS.

The Court also noted that the FCC affirmed this expanded definition in 2008, and reaffirmed it again in 2012. In particular, in 2012, the FCC stated that ATDS systems include systems that have the "capacity to store or produce and dial those numbers at random, in sequential order, or from a database of numbers." 27 FCC Rcd. 15391, 15392 n.5 (2012).

In addition, according to the FCC, this definition was not limited to "predictive dialers" but also included "web-based text messaging platforms."

Accordingly, the Court held that the fact that the Club's "system has the ability to send text message from preprogrammed lists, rather than randomly or sequentially, does not disqualify it as an ATDS."

Second, the Club argued that even if FCC regulations applied, the web-based platform used to send the text messages at issue was still not within the definition of an ATDS because it required "human intervention" to send message.

The Court agreed, holding that the web-based platform was not an ATDS because the text messages that it sent were the "result of human intervention."

As you may recall, in a 2008 ruling, reiterated in its ruling earlier this year, the FCC stated that the "defining characteristic of an autodialer is 'the capacity to dial numbers without human intervention.'" 23 FCC Rcd. At 566.

The Court held that, therefore, the "capacity to dial numbers without human intervention is required for TCPA liability."

Applying these TCPA definitions to the Club's web-based platform, the Court held that it was not an ATDS.

It held that "human intervention was involved in several stages of the process" prior to the client receiving the text messages. This included, among other things, transferring the numbers into the database, determining when to send the message, and actually clicking "send" to transmit the message.

The Court held that the web-based platform did not have the capacity to send texts automatically without any human intervention. Indeed, it could not send text messages without human intervention, and thus was not an ATDS.

Therefore, the Court held that the Club was not liable under the TCPA and granted summary judgment in favor of the Club.

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